by Beatrice Le Bohec
ISFAHAN, Iran - OPEC kingpin Saudi Arabia signalled Tuesday it could act alone to meet a predicted increase in demand for oil, as it pushed hesitant fellow members of the cartel to raise production quotas immediately.
"Uppermost in our mind is to satisfy the demand that is out there," Saudi Oil Minister Ali al-Nuaimi told reporters, after predicting "a substantial rise (in demand) between the third and fourth quarter to the tune of two plus million" barrels per day (bpd).
When asked if the kingdom would act alone, he replied: "We have done many things in the past. We will do what we have to do."
OPEC ministers are to meet in this central Iranian oasis and ancient Persian capital on Wednesday to consider the Saudi demand that it raise its production ceiling of 27 million bpd by 500,000.
"How much I don`t know today, but it is going to be required and we are willing to contribute with our colleagues in OPEC to satisfy the increasing demand," Nuaimi said.
Kuwaiti Energy Minister and OPEC President Sheikh Ahmad Fahd al-Sabah said the grouping -- which produces around 40 percent of the world`s crude -- would raise its member quotas but had yet to decide on the timing.
OPEC`s key advisory committee proposed a compromise, recommending that the cartel raise its ceiling by 500,000 bpd if prices stay high through April, a source close to the talks said.
"The recommendation ... is that OPEC will continue to monitor the markets, to continue to monitor the price developments through April. If prices remain at current levels we may increase the ceiling by 500,000 (bpd) with effect May 1," the official said.
World oil prices fell Tuesday following the Saudi call.
New York`s main contract, light sweet crude for delivery in April, dropped 32 cents to 54.63 dollars a barrel in early afternoon deals, reversing initial gains.
In London, the price of Brent North Sea crude oil for delivery in April fell six cents to 53.60 dollars a barrel, also after early winnings.
Algeria`s Energy Minister Chakib Khelil said ministers here had received telephone calls from the US administration.
"Of course everyone has had calls from the Americans. They are asking us to do our best to calm the markets," he said, adding that such telephone lobbying was "normal" for an OPEC meeting.
Several ministers have expressed their hostility to the Saudi proposal, arguing that the market was already well supplied and that they could do little to ease near record price levels.
Iran`s Oil Minister Bijan Namdar Zanghaneh said that "if we didn`t have the high price in the market, based on the fundamentals we should decrease production in this meeting. We have a market that is well supplied."
March is usually a time when OPEC ministers mull cutting output due to warming weather in the northern hemisphere.
But the most recent oil price rises have come in the wake of a report last week from the International Energy Agency that raised forecasts for global oil demand this year.
"The difficulty in the market is not the supply shortage, there are some other issues -- political, technical, out of OPEC" hands, Zanghaneh said.
Algeria`s Khelil said any "goodwill gesture" would "not mean anything in terms of reducing the price."
"We are not driving the market. There is not much we can do," he said.
And Nigeria`s presidential advisor for oil, Edmund Daukoru, said OPEC members were already pumping out oil "well beyond" the official ceiling.
Nuaimi`s warning that Saudi Arabia could act alone also drew a terse response from Libyan energy secretary Fathi Hamed ben Shatwan.
"It is wrong. But he is free, you cannot hold him to do anything," said Shatwan, who had earlier argued that a potential oil price of 60 dollars a barrel "will not affect the world economy".
"Economically there is no reason to increase, but psychologically maybe," Shatwan said. "If it is very necessary we will add, but in the future. In this meeting we are not going to increase but watch the market."
Informa Global Markets analyst Peter Luxton said any hike in output "would just legitimise most of the current overproduction".
He added: "Conflicting signals from OPEC ministers indicate the meeting will not be a smooth one."

03/15/2005 19:36 GMT